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Five Below Shares Rise on Earnings Above Expectations

Five Below's net income hit 43 cents a share in the quarter, up from 36 cents a year earlier and beating the FactSet analyst consensus of 29 cents.
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Five Below  (FIVE) - Get Five Below, Inc. Report shares rose Thursday after the retailer reported fiscal-third-quarter results that beat expectations 

For the quarter ended Oct. 30 net income at the Philadelphia company hit $24.2 million, or 43 cents a share, up from $20.4 million, or 36 cents a share, in the year-earlier quarter. The FactSet analyst consensus called for 29 cents in the latest quarter.

Net sales soared 28% to $608 million from the pandemic-affected $477 million a year ago. The analyst consensus called for $564 million in the latest quarter.

Comparable-store sales advanced 14.8% in the quarter against the FactSet estimate of 5.3% for the period.

The stock recently traded near $192, up 1.5%. The stock has traded on Thursday up as much as 8.9% at $206.01. The 52-week high near $238 came in m

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Chief Executive Joel Anderson said the results reflected the company's strong execution "in a challenging supply chain environment. … We opened 52 new stores across 24 states [and] have completed our 171 new openings for the year.”

Morningstar analyst Zain Akbari was impressed with the numbers, though he assigns the company no moat.

“Our $136 per share [fair] valuation of no-moat Five Below should rise by a mid- to high-single-digit percentage, after it announced third-quarter earnings above our expectations (15% comparable growth versus our 6% forecast).

“We attribute the magnitude of the differential to pandemic-related volatility rather than a shift in Five Below’s long-term prospects.

“So our long-term view (low-double-digit percentage annual revenue growth and low-teens adjusted operating margins from fiscal 2022-30, on average) remains intact.